Grupo Simec(SIM) - 2022 Q1 - Quarterly Report

Financial Performance - Net sales increased by 55% from Ps. 35,869 million in 2020 to Ps. 55,620 million in 2021, driven by higher shipments and a 51% increase in average sales price[2] - Gross profit increased to Ps. 15,652 million in 2021, representing 28% of net sales, up from 19% in 2020[4] - Operating income surged by 161% from Ps. 5,185 million in 2020 to Ps. 13,532 million in 2021, with operating income as a percentage of net sales rising from 14% to 24%[7] - EBITDA increased by 122% to Ps. 14,707 million in 2021, compared to Ps. 6,637 million in 2020[8] - Net income rose by 238% from Ps. 2,798 million in 2020 to Ps. 9,444 million in 2021[12] - Total sales for the year 2021 reached Ps. 55,620 million, a 55% increase from Ps. 35,869 million in 2020[40] - Gross profit for 2021 was Ps. 15,652 million, representing a 135% increase from Ps. 6,657 million in 2020[40] - The company’s net income for the full year 2021 was Ps. 9,444 million, a 238% increase from Ps. 2,798 million in 2020[40] Sales and Shipments - Shipments of finished steel products rose by 3% to 2,504 thousand tons in 2021 compared to 2,441 thousand tons in 2020[2] - Total sales outside of Mexico increased by 55% to Ps. 27,576 million in 2021, while total sales in Mexico also rose by 55% to Ps. 28,044 million[2] - Total revenue for Grupo Simec in Q4 2021 reached Ps. 55,620,356 thousand, with domestic sales contributing Ps. 28,044,620 thousand and foreign sales contributing Ps. 19,072,122 thousand[152] Costs and Expenses - Cost of sales increased by 37% to Ps. 39,968 million in 2021, with cost of sales as a percentage of net sales decreasing from 81% in 2020 to 72% in 2021[3] - Selling, general and administrative expenses increased by 1% to Ps. 2,043 million in 2021, representing 4% of net sales[5] - The company incurred finance costs of 87,445 thousand pesos, a decrease from 416,910 thousand pesos in the previous year, reflecting a reduction of 79.0%[51] Profitability Metrics - Basic earnings per share for the current year were 20.41 pesos, a substantial rise from 5.94 pesos in the previous year, representing an increase of 244.4%[51] - Profit before income tax for the current year reached 13,835,636 thousand pesos, a significant increase from 4,875,927 thousand pesos in the previous year, representing a growth of approximately 184%[55] - Comprehensive financial cost improved to a net income of Ps. 304 million in 2021, compared to a net expense of Ps. 309 million in 2020[10] Cash Flow and Assets - Net cash flows from operating activities amounted to 8,387,332 thousand pesos, compared to 3,633,875 thousand pesos in the previous year, indicating a year-over-year increase of about 131%[55] - Cash flows from investing activities showed a net outflow of 1,009,673 thousand pesos, which is a decrease from the previous year's outflow of 832,671 thousand pesos[55] - The company reported a net increase in cash and cash equivalents of 7,215,717 thousand pesos, up from 715,474 thousand pesos in the previous year, reflecting a growth of over 909%[55] - Total assets at the end of Q4 2021 were Ps. 57,342,572 thousand, up from Ps. 45,438,156 thousand at the end of the previous year[44] Equity and Shareholder Information - Total equity increased to 41,962,528 thousand pesos from 33,181,119 thousand pesos, reflecting a growth of 26.5%[51] - The company repurchased shares worth 74,497 thousand pesos during the year, compared to 41,984 thousand pesos in the previous year, indicating an increase in share repurchase activity[57] - Total equity attributable to owners of the parent at the end of the year was 33,145,109 thousand pesos, an increase from 32,584,977 thousand pesos at the end of the previous year[59] Employee and Operational Metrics - The number of employees increased to 1,890 from 1,763, showing a growth of 7.2%[46] - The company reported a total of 2,504 sales transactions across various product lines in Q4 2021[152] Financial Reporting and Accounting Policies - The functional currency for the company is the Mexican peso, with U.S. subsidiaries using the U.S. dollar and Brazilian subsidiaries using the Brazilian real for financial reporting[82][83] - The company follows a practice of estimating allowances for doubtful accounts based on customer balances over one year old, which may lead to material differences in future results[86] - Inventories are recorded at the lower of acquisition cost and market value, with a reserve for slow-moving inventory established for products not consumed within one year[87][88] - Property, plant, and equipment are recorded at cost less impairment losses, with estimated useful lives ranging from 3 to 65 years depending on the asset type[90] Financial Instruments and Risk Management - The Company uses derivative financial instruments to manage exposure to natural gas price fluctuations, recognizing gains or losses immediately unless designated as hedging instruments[131] - The Company assesses the effectiveness of hedging instruments, considering them highly effective if they offset 80% to 125% of the changes in fair value or cash flows[135]